Why BP Will Stay In Russia |
| Forbes - Jun 1, 2012 |
After considerable speculation as to who was divorcing who in the on-going TNK-BP saga, BP appears first to be stilted. The British oil major has received ‘unsolicited indications’ for its 50% holding in TNK-BP. The Anglo-Russian entity was valued at $60bn last year, with formative price tags predictably coming in at $30bn to ease BP’s divorce from its acrimonious AAR wife.
So, BP sells up, gets $30bn to cover environmental costs from its ‘Macondo mishaps’ in the US, with plenty of cash left to play with for upstream ventures elsewhere. Sounds plausible, but given TNK-BP accounts for 29% of BP’s production; 27% of reserves, alongside 17% of BP’s cash flow (returning $3.7bn last year) – the London major can’t afford to exit its TNK position without guarantees that it will have unfettered access to lucrative Russian Arctic plays in future. That would do much to arrest the accusations that Bod Dudley has no growth strategy compared to IOC competitors. Equity partnership with Rosneft would probably be the preferred method for investor security to make sure BP’s Russian future was secured.
Rosneft is being remarkably coy so far; it’s newly anointed CEO, Igor Sechin, has said they need to ‘fully study the information and then afterwards make a decision’. But if a parallel Arctic deal isn’t lined up for BP, expect any prospective price tag to drastically rise for TNK. The opportunity-costs of losing access to Russian reserves would be enormous for London. More importantly, Bob Dudley is perfectly placed to leverage internal wars being fought over the future of the Russian energy sector.
Read Full Article from Forbes
- Posted: 2012-06-01 11:46:47
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